Purchasing a home stands as one of the most substantial financial commitments individuals undertake. The usual duration of a mortgage spans from 20 to 30 years, thus necessitating careful consideration of various costs, particularly the interest rate attached to the home loan.
The fixed and variable interest rates are subject to fluctuations in the market. Therefore, it is crucial to stay abreast of the direction in which these rates are moving, regardless of whether you are in the process of buying a home, making investments, or refinancing.
We vigilantly track the actions taken by the Reserve Bank of Australia in relation to the cash rate. This ensures that you stay well-informed about how changes in monetary policy impact your mortgage repayments.
Below are the key details you should be aware of regarding home loan interest rates for the current month.
Average home loan rates in May 2024
- Cash rate: 4.35%
- Average variable rate home loan (OO, P&I, LVR <80%): 6.80% p.a.*
- Average 2-year fixed home loan (OO, P&I, LVR <80%): 6.33% p.a.*
At the time of writing, the average rates for a home loan amount of $400,000 owner-occupier (OO, P&I, LVR >80%)* are:
- Variable rate: 6.80% p.a.
- 1-year fixed rate: 6.46% p.a.
- 2-year fixed rate: 6.33% p.a.
- 3-year fixed rate: 6.26% p.a.
- 4-year fixed rate: 6.46% p.a.
- 5-year fixed rate: 6.51% p.a.
*Mozo data
May 2024 home loan insights
In recent months, the Reserve Bank of Australia (RBA) has maintained a steady cash rate at 4.35%, signalling a potential shift into a new interest rate era characterised by stability. This suggests that we may have reached the pinnacle of the significant rate hikes that defined the previous year. While home loan interest rates have indeed seen an increase, indications point towards them having plateaued.
This presents a favourable window to conduct a thorough comparison of home loans and make decisions that align with your financial situation and budget. The likelihood of a predicted reduction in the cash rate by experts at the Big Four Banks in late 2024 may result in lowered home loan rates. Opting for a variable home loan now could potentially lead to significant cost savings in the near future.
Conversely, in anticipation of potential adjustments to official rates, lenders may be inclined to lower fixed home loan offers to attract customers. Locking in a fixed interest rate when these offers become available can offer added financial security for your budget, especially if you prefer consistent repayments over an extended period.
Check out our Average Mortgage in Australia page for a more detailed look at the impact of the RBA over the last year.
